Featured Product

    BaFin on Division of Financial and Traditional Non-Life Reinsurance

    July 18, 2019

    BaFin published an interpretative decision on delineation of financial reinsurance from traditional reinsurance in the non-life sector. Under Article 208 (2), second sentence, of the Delegated Regulation (EU) 2015/35, non-life insurance undertakings may not take into account financial reinsurance business or similar arrangements where the effective risk transfer is similar to a financial reinsurance transaction, provided that the volume measures for the premium and provision risk determine or calculate appropriate company-specific parameters. They must, therefore, distinguish financial reinsurance from traditional reinsurance. The interpretative decision is to be applied to all insurance companies domiciled in Germany and to branches of third-country insurance undertakings operating in the non-life insurance business.

    In the area of non-life insurance, the expected loss of the reinsurer (Expected Reinsurer's Deficit or ERD) is used as a measure of risk transfer when differentiating financial reinsurance from inadequate risk transfer. A sufficient transfer of risk exists if the absolute amount of the expected loss of the reinsurer amounts to at least 1% of the expected premium. It makes sense to use ERD for the distinction between financial reinsurance and traditional reinsurance. In any case, in the field of non-life insurance, the Federal Agency assumes traditional reinsurance if the absolute amount of the expected loss of the reinsurer amounts to 2.5 percent or more of the expected premium. However, the provisions on the demarcation of financial reinsurance from inadequate risk transfer remain unaffected by the interpretative decision.

     

    Related Links (in German)

    Keywords: Europe, Germany, Insurance, Reinsurance, Financial Reinsurance, Traditional Reinsurance, Non-Life Insurance, Risk Transfer, Solvency II, BaFin

    Featured Experts
    Related Articles
    News

    APRA Updates Lists of Validation and Derivation Rules in December 2019

    APRA updated the lists of the Direct to APRA (D2A) validation and derivation rules for authorized deposit-taking institutions, insurers, and superannuation entities.

    December 13, 2019 WebPage Regulatory News
    News

    APRA Finalizes Prudential Standard for Credit Risk Management of Banks

    APRA updated the prudential standard on credit risk management requirements (APS 220) for authorized deposit-taking institutions, post a public consultation.

    December 12, 2019 WebPage Regulatory News
    News

    EIOPA Consults on Guidelines on ICT Security and Governance

    EIOPA issued a consultation on guidelines on the Information and Communication Technology (ICT) security and governance by insurers.

    December 12, 2019 WebPage Regulatory News
    News

    BCBS Consults on Design of Prudential Treatment for Crypto-Assets

    BCBS published a discussion paper on the design of prudential treatment for crypto-asset exposures of banks.

    December 12, 2019 WebPage Regulatory News
    News

    NCUA Approves Delay of Risk-Based Capital Rules Until January 2022

    The NCUA Board held its eleventh open meeting of 2019 and approved a final rule to delay the effective date of the risk-based capital rules for credit unions to January 01, 2022.

    December 12, 2019 WebPage Regulatory News
    News

    APRA Issues Operational Risk Rules, Consults on Reporting Requirements

    APRA published an updated prudential standard APS 115 that sets out operational risk requirements for authorized deposit-taking institutions in Australia.

    December 11, 2019 WebPage Regulatory News
    News

    ESMA Updates Q&A on European Benchmarks Regulation in December 2019

    ESMA updated the question and answers (Q&A) document on the European Benchmarks Regulation.

    December 11, 2019 WebPage Regulatory News
    News

    APRA Decides to Keep Countercyclical Capital Buffer for Banks at 0%

    APRA announced its decision to keep the countercyclical capital buffer (CCyB) for authorized deposit-taking institutions on hold at zero percent.

    December 11, 2019 WebPage Regulatory News
    News

    ESMA on Draft Amendments to Indices and Recognized Exchanges Under CRR

    ESMA issued the final report on draft amendments to the Implementing Regulation (EU) 2016/1646, which specifies the main indices and recognized exchanges, under the Capital Requirements Regulation (CRR), that are relevant to credit institutions and investment firms subject to prudential requirements and trading venues.

    December 11, 2019 WebPage Regulatory News
    News

    FED Extends Consultation Period for Capital Requirements for Insurers

    FED is extending comment period for the proposed rule establishing risk-based capital requirements for depository institution holding companies that are significantly engaged in insurance activities.

    December 10, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4316